China sovereign fund exits Blackstone investment

Reuters Staff

3 Min Read

HONG KONG, March 14 (Reuters) - China’s sovereign wealth fund China Investment Corp (CIC) has sold its equity holding in Blackstone Group LP, the U.S. private equity firm said in a filing, exiting from an 11-year old investment.

The original agreement with Beijing Wonderful Investments - the legal entity set up by CIC to invest in Blackstone - was struck in May 2007, just before the private equity firm’s initial public offering a month later.

The pact allowed the sovereign wealth fund to own up to 9.99 percent of the private equity firm. In 2008, the sovereign wealth fund raised its stake in Blackstone to 12.5 percent, Reuters reported at that time.

CIC’s exit from Blackstone comes amid growing trade tensions between Beijing and Washington since President Donald Trump took office just over a year ago.

Trump is seeking to impose tariffs on up to $60 billion of Chinese imports and will target the technology and telecoms sectors, two people who had discussed the issue with the Trump administration said on Tuesday.

“As of February 22, 2018, Beijing Wonderful Investments no longer owned any non-voting common units,” Blackstone said in its annual report filed with the securities regulator earlier this month. It did not give details.

Beijing-headquartered CIC, whose assets had surpassed $800 billion by the end of 2016 thanks mainly to stronger returns from its overseas portfolios, did not immediately respond to a Reuters request for comment.

Despite CIC’s stake sale, a Blackstone spokesman said in a separate emailed statement on Wednesday that the U.S. private equity firm continues “to expand this important relationship as one of CIC’s major asset managers.”

The financial details of CIC’s stake sale in Blackstone was not immediately clear, and a person familiar with the matter said the sovereign fund had been gradually selling its shares over the last few years.

CIC, which was founded to help China boost returns on its foreign exchange reserves, had about 4.5 percent stake in Blackstone at the end of last year, said the person, who declined to be named as the information is not public. (Reporting by Sumeet Chatterjee; additional reporting by Matt Miller)